Andrew Scheer promises to make EI maternity, parental benefits tax-free

Conservative leader says someone earning $50K could save as much as $4K in federal taxes under his plan

Cbc.ca
August 21, 2019
John Paul Tasker

Conservative Leader Andrew Scheer says that, if his party forms the next federal government, he'll make Employment Insurance (EI) benefits for new parents tax-free to ease the cost of raising a child in Canada.

Scheer made the announcement during a campaign-style stop at a Toronto-area child care centre, touting the promise as a cornerstone of the Conservative plan to make life more affordable for Canadian families through a series of tax cuts.

The major party leaders have fanned out across the country in recent days, announcing billions of dollars in new spending commitments to woo voters ahead of the fall federal election. Prime Minister Justin Trudeau is expected to formally call an election sometime after Labour Day.

The Liberal Party also has targeted new spending commitments at swing voters in key battleground ridings, including ridings in Atlantic Canada, the Quebec City area, the Toronto suburbs, southwestern Ontario and B.C.'s Lower Mainland.

The Conservative plan would give new parents a non-refundable tax credit of 15 per cent on EI income, which essentially would eliminate the federal portion of the tax collected on this income support.

Scheer said a person earning a salary of $50,000, who then goes on EI benefits after a birth, would save about $4,000.

"The government shouldn't tax parents for the time they take to care for and bond with their new child when they're already making such a huge sacrifice," Scheer said. "This will help families across Canada get ahead."

However, a non-refundable tax credit is not much use for low-income parents, as they already pay very little or no federal income tax.

Not every mother is eligible for EI benefits; a claimant must have accumulated at least 600 hours of insurable employment in a qualifying period, while a self-employed worker must have earned a certain amount of income. An estimated 30 per cent of all new moms do not qualify for EI.

Based on data compiled by Jennifer Robson, a professor of political management at Carleton University, higher income Canadians stand to gain the most from this type of tax credit. According to Robson's math, a person earning roughly $24,000 in income before starting leave would see a tax benefit worth about $1,900, while someone earning $82,000 would see the federal taxes they owe reduced by about $4,200.

Scheer first proposed this measure last year in a private member's bill, a piece of legislation that was defeated by the Liberal majority in the House of Commons.

"At the end of the day, Justin Trudeau thinks he can spend your money better than you," Scheer said, adding "endless" Liberal deficits will lead inevitably to higher taxes.

"There's a real cost of living crunch in this country and Justin Trudeau's running around making things more expensive with carbon taxes, with increased payroll taxes. He hasn't done anything to address real issues like housing and things like that."

The parliamentary budget officer (PBO) estimated Scheer's tax break for parents would cost the federal government some $607 million in lost revenue each year.

The Liberal government also has pinned its re-election hopes on a plan to make life more affordable for middle-class Canadians.

The Canada Child Benefit (CCB), a tax-free program that sends monthly cheques to most parents with kids, has sent billions of dollars in support to families. The government recently boosted benefits to keep them in line with inflation.

Under the CCB, the maximum benefit for a child under six is $6,639; for children between the ages of six and 17 it's $5,602. Families don't have to pay taxes on CCB payments.

The government claims that, since it was introduced, the CCB has lifted some 300,000 children out of poverty. Conservative MPs voted against enacting the benefit, which was part of the Liberal government's first federal budget in 2016.

The CCB is slated to cost $24.3 billion in the 2018-19 fiscal year. Nearly 3.7 million families receive the child benefit each year, according to government data.

Scheer has said a Conservative government under his leadership would maintain the Liberal program. "Of course we're going to continue to support that program and any program that provides child care support directly to parents, It's a Conservative principle."